The ACIT, Vapi Circle, Vapi V. Daman Polythread Ltd., Daman

ITA 4164/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0283 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-08-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 21-11-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K MADHUSUDAN SRDR
• Assessee Lawyers: D BHASKARA RAO
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH BEFORE SHRI G.D. AGARWAL, VICE-PRESIDENT (AZ) AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.4164/AHD/2007 [ASSTT.YEAR:2002-03] ASSISTANT COMMISSIONER OF INCOME- -VS- DAMAN POL YTHREAD LTD. TAX, VAPI CIRCLE, VAPI PLOT NO.722/736, OPP. RINGANWADA GOVT. SCHOOL, VILLAGE DABHEL, DAMAN PAN NO.AABCD0702E (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K MADHUSUDAN, SR-DR ASSESSEE BY: SHRI D.BHASKARA RAO, AR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS), VALSAD IN APPEAL NO. CIT(A)/V LS/25/07-08 DATED 13-09-2007. THE ASSESSMENT WAS FRAMED BY THE ACIT, VAPI CIRCLE U/S.143(3) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDER DATED 24-09- 2006 FOR ASSESSMENT YEAR 2002-03. THE PENALTY UNDER DISPUTE WAS LEVIED BY ACIT, VAPI CIRCLE U/S.271(1)(C) OF THE ACT VIDE HIS ORDER DATED 28-03-2007. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) IN DELETING PENALTY LEVIED BY ASSESSING OFFICER U/S.27 1(1)(C) OF THE ACT ON THE BASIS THAT ASSESSEE HAS NOT COMPUTED THE INCOME U/S.115JB OF T HE ACT. FOR THIS, REVENUE HAS RAISED THE FOLLOWING TWO EFFECTIVE GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING PENALTY LEVIED U/S.271 (1)(C) OF THE ACT AMOUNTING TO RS.2,16,351/- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN OBSERVING THAT PENALTY WAS LEVIED ON A SSUMPTION AND WITHOUT ANY ITA NO.4164/AHD/2007 A.Y. 2002-03 ACIT, CIR-VAPI V. DAMAN POLYTHREAD LTD. PAGE 2 BASIS, THOUGH ASSESSEE FAILED TO PAY LEGITIMATE TAX OF RS.2,16,351/- U/S.115JB OF THE ACT. 3. THE BRIEF FACTS ARE THAT THE ASSESSEE-COMPANY IS ENGAGED IN THE MANUFACTURE OF POLYPROPYLENE MULTIFILAMENT YARN AND SEWING THRE AD FOR INDUSTRIAL PURPOSES AND RETURN OF INCOME WAS FILED BY THE ASSESSEE-COMPANY ON 11-10-2002 SHOWING A LOSS OF RS.16,24,266/-. THE INCOME WAS PROCESSED U/S.143 (1) ON 30-12-2002 AND ASSESSMENT WAS COMPLETED U/S.143(3) ON 17-121-2004 REDUCING THE LOSS TO RS.14,62,895/- AS AGAINST THE RETURNED LOSS OF RS.1 6,24,266/-. SUBSEQUENTLY, THE ASSESSING OFFICER NOTICED FROM CASE RECORDS THAT TH E ASSESSEE HAS NOT PAID TAX UNDER MINIMUM ALTERNATE TAX (MAT IN SHORT), THOUGH THE ASSESSEE HAS BOOK PROFIT AS PER THE COMPANYS ACT. THE ASSESSEE HAS ALSO NOT FILED FORM NO.29B ALONG WITH RETURN OF INCOME AS PER THE PROVISIONS OF SEC.115JB OF THE ACT. THE ASSESSEE- COMPANY HAS INCOME-TAX PAYABLE ON THE TOTAL INCOME COMPUTED UNDER THE ACT IS LESS THAN 7% OF THE BOOK PROFIT, AND SUCH BOOK PROFIT I S DEEMED TO BE TOTAL INCOME OF THE ASSESSEE-COMPANY AND TAX IS PAYABLE BY THE ASSE SSEE-COMPANY ON THIS TOTAL INCOME @ 7%. THE AO IN VIEW OF THIS INITIATED RE-A SSESSMENT PROCEEDINGS U/S 147 OF THE ACT AND AFTER RECORDING REASONS ISSUED NOTIC E U/S.148 OF THE ACT ON 20-06- 2006 AND RE-ASSESSMENT WAS COMPLETED U/S.147 R.W.S. 143(3) ON 24-09-2006 DETERMINING TOTAL INCOME AT RS.28,28,122/- U/S.115J B OF THE ACT. THE ASSESSEE HAS NOT PREFERRED ANY APPEAL AGAINST THE RE-ASSESSMENT. THE AO STARTED PENALTY PROCEEDINGS U/S.271(1) OF THE ACT FOR FURNISHING I NACCURATE PARTICULARS OF INCOME AND NOT PAYING THE TAX UNDER MAT PROVISIONS OF THE ACT. THE AO LEVIED PENALTY BY STATING THAT THOUGH THE ASSESSEE WAS LIABLE TO PAY TAX U/S.115JB OF THE ACT, BUT IT FAILED TO FILE REQUIRED REPORT IN FORM NO.29B. ACCO RDINGLY, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME TO THE T UNE OF RS.28,28,122/- COMPUTED U/S.11JB OF THE ACT AND FAILED TO PAY TAX LIABILITY . ACCORDINGLY, HE LEVIED THE PENALTY U/S.271(1) OF THE ACT. AGGRIEVED, ASSESSEE PREFERR ED APPEAL BEFORE CIT(A) AND CIT(A) DELETED THE PENALTY BY GIVING FOLLOWING FIND ING IN PARA-5.3 OF HIS APPELLATE ORDER:- 5.3 I HAVE PERUSED THE FACTS OF THE CASE. ADMITTED LY THE APPELLANT COMPANY HAS FILED ITS RETURN OF INCOME ALONG WITH THE AUDIT ED ACCOUNTS. THE ASSESSING OFFICER HAS LEVIED THE PENALTY FOR NON FILING OF ST ATEMENT OF INCOME U/S.115JB ALONG WITH AUDIT REPORT IN FORM NO.29B CONSTRUING I T AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT IS NOT IN DISP UTE THAT THE ONLY OMISSION OF THE APPELLANT IS NON FILING OF TAX COMPUTATION U/S. 115JB ALONG WITH AUDITORS ITA NO.4164/AHD/2007 A.Y. 2002-03 ACIT, CIR-VAPI V. DAMAN POLYTHREAD LTD. PAGE 3 CERTIFICATE IN FORM NO.29B. THE ASSESSING OFFICER S HOULD HAVE TAKEN RECOURSE TO THE PROVISIONS OF THE ACT BY ISSUING A DEFECT LE TTER AT THE TIME OF PROCESSING THE RETURN OR EVEN DURING THE TIME OF RE-ASSESSMENT PROCEEDINGS. ADMITTEDLY THIS HAS NOT BEEN DONE AND THE APPELLANT HAS NOT FU RNISHED ANY WRONG CALCULATIONS OR INACCURATE PARTICULARS. IN THIS CIR CUMSTANCES ON A PERUSAL OF THE FACTUAL MATRIX OF THE CASE I AM OF THE CONSIDER ED OPINION THAT THE ASSESSING OFFICER HAS LEVIED PENALTY WITHOUT ANY BA SIS. I DO NOT AGREE WIDTH THE ASSUMPTION OF THE ASSESSING OFFICER THAT MERE N ON FILING OF TAX COMPUTATION U/S.115JB RESULT IN CONCEALMENT OF INCOME OR FURNIS HING OF INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER IS DIR ECTED TO DELETE THE PENALTY LEVIED U/S.271(1) OF THE ACT AND VARIOUS GROUND OF APPEALS RAISED BY THE APPELLANT COMPANY ARE ALLOWED. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSI NG OFFICER HAS LEVIED THE PENALTY ONLY ON THE PREMISE THAT THE ASSESSEE HAS NOT PAID THE TAX UNDER MAT THOUGH IT HAS BOOK PROFIT AS PER THE COMPANYS ACT. HE NOTED THAT THE ASSESSEE HAS NOT FILED EVEN FORM NO.29B WITH THE RETURN OF INCOME AND AS PER TH E PROVISION OF SECTION 115JB OF THE ACT WHERE THE INCOME TAX PAYABLE ON THE TOTAL I NCOME OF THE ASSESSEE-COMPANY COMPUTED UNDER THE INCOME-TAX ACT IS LESS THAN 7% OF THE BOOK PROFIT, SUCH BOOK PROFIT SHALL BE DEEMED TO BE THE TOTAL INCOME OF TH E ASSESSEE-COMPANY AND THE TAX PAYABLE BY THE ASSESSEE ON SUCH TOTAL INCOME SHALL BE THE AMOUNT OF INCOME-TAX @ 7%. ACCORDING TO HIM, AS PER PROFIT AND LOSS A/C P REPARED IN ACCORDANCE WITH THE PROVISIONS OF PARTS II & III OF SCHEDULE VI OF COMP ANIES ACT, THE COMPANY HAS BOOK PROFIT AT RS.28,28,122/- AND ACCORDINGLY AO LEVIED THE PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME AS THE ASSESSEE HA S FAILED TO FILE REQUIRED REPORT IN FORM NO.29B. WE FURTHER FIND FROM THE RECORDS THAT ASSESSEE MADE CONTENTION BEFORE THE LOWER AUTHORITIES AND EVEN BEFORE US THA T NON-FILING OF COMPUTATION U/S.115JB OF THE ACT DURING THE TIME OF FILING ITS RETURN OF INCOME WAS A BONA FIDE MISTAKE ON THE PART OF ITS CHARTERED ACCOUNTANT AND ASSESSEE SUBMITTED THAT AT THE TIME OF ISSUING INTIMATION U/S.143(1) OF THE ACT AN D MAKING ASSESSMENT U/S.143(3) OF THE ACT DID NOT OCCUR TO THE AO THAT INCOME SHOULD HAVE BEEN COMPUTED U/S.115JB OF THE ACT AS SUCH COMPUTATION RESULTS IN HIGHER IN COME. IT WAS SUBMITTED THAT THE BONA FIDE MISTAKE WAS ALSO CONTINUED BY THE AO WHEN THE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT. IT WAS ALSO SUBMIT TED THAT OVERLOOKING OF NON- DISCRETIONARY BUT MANDATORY PROVISIONS IS A MISTAKE APPARENT FROM RECORD WHICH IS ITA NO.4164/AHD/2007 A.Y. 2002-03 ACIT, CIR-VAPI V. DAMAN POLYTHREAD LTD. PAGE 4 RECTIFIABLE U/S.154 OF THE ACT. WE FIND THAT THE AS SESSEE IS A PRIVATE LIMITED COMPANY AND IS LIABLE TO FURNISH TWO COMPUTATIONS I.E. U/S1 43(3) OF THE ACT AND ANOTHER U/S.115JB OF THE ACT, WHILE FILING ITS RETURN OF IN COME. ADMITTEDLY, THE ASSESSEE- COMPANY WAS ASSESSED AT LOSS UNDER NORMAL PROVISION S OF THE ACT BUT AS PER PROFIT AND LOSS ACCOUNT PREPARED IN ACCORDANCE WITH THE PR OVISIONS OF THE COMPANYS ACT THE COMPANY HAD NET PROFIT OF RS.28,28,122/- AND EV EN AFTER MAKING REQUIRED ADJUSTMENT AS PER SECTION 115JB OF THE ACT, NET PRO FIT OF THE ASSESSEE REMAINED AT RS.28,28,122/-. 5. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS FRAMED ASSESSMENT U/S.143(3) OF THE ACT AND ALL THE MATERIAL FACTS WERE AVAILABLE BEFORE HIM AT THE TIME OF ORIG INAL ASSESSMENT, BUT THE ASSESSING OFFICER COULD NOT NOTICE THAT THE ASSESSEE-COMPANY HAS BOOK PROFIT. EVEN OTHERWISE, THE ASSESSEE HAS FILED COMPLETE DETAILS FOR FRAMING OF ASSESSMENT, THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS COULD HAVE NOTICED THAT THE ASSESSEE-COMPANY HAS BOOK PROFIT AVAILABLE IN THE PROFIT AND LOSS AC COUNT BUT THIS WENT UNNOTICED. ACCORDINGLY, WE ARE OF THE VIEW THAT THIS BEING A B ONA FIDE MISTAKE ON THE PART OF THE ASSESSEE-COMPANY, THE PENALTY U/S.271(1) OF THE AC T CANNOT BE LEVIED. WE UPHOLD THE ORDER OF CIT(A) DELETING THE PENALTY AND DISMIS S THE APPEAL OF THE REVENUE. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS DAY OF 13 TH AUGUST, 2010 SD/- SD/- ( G.D.AGARWAL ) ( MAHAVIR SINGH ) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD, DATED : 13/08/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-VALSAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD